Futures up, but outlook uncertain

Intel lower after mid-quarter update; IBM downgraded

LONDON (MarketWatch) -- U.S. stock market futures traded slightly higher Friday, but the outlook was still uncertain given Intel's lackluster mid-quarter update, a downgrade of technology giant International Business Machines and further rises in energy futures contracts weighing on sentiment.

March-dated S&P 500 futures were up 2.90 points at 1,267.70 while Nasdaq 100 futures were up 1.5 points at 1,705.50. Dow futures were last up 16 points at 10,834.

Energy futures climbed again in early morning electronic trade on Friday, with natural-gas contracts trading up 23.4 cents at $15.228 per million British thermal units, off a record high of $15.52 reached earlier in the session, and crude-oil futures up 37 cents at $61.03 a barrel. A U.S. cold snap and declining inventories have reignited concerns over winter heating-fuel supplies.

Markets on Friday will be looking to a poll of December consumer sentiment, to be released after the market open, that's expected to climb to 85.9 from 81.6 in November, according to economists polled by MarketWatch.

Data on wholesale inventories also is due.

February gold futures shot up to more than 20-year highs. The contract was last up $3.80 at $526.50 an ounce in electronic trading, after reaching a high of $529.00 earlier in the session.

The euro was down 0.2% at $1.1789 ahead of the data, while the dollar was steady on the yen at 120.46 yen.

Of companies in focus, Dow component Intel
INTC, +0.56%
the world's largest maker of computer chips, declined 2.1% to $25.15 in Instinet pre-open trading, after it forecast sales between $10.4 billion and $10.6 billion, as compared with the previous range of $10.2 billion to $10.8 billion.

Analysts polled by Thomson First Call estimate that the company will rack up revenue of $10.6 billion.

Ahead of the update, Intel's stock had lost 6.3% since closing at a 4-month high on Dec. 2.

Also in technology, Dow component International Business Machines
IBM, +0.35%
slipped 1% to $86.60 in Instinet after it was downgraded to neutral from buy at UBS, with the broker noting the share price is approaching its $100 price target. "While we believe solid hardware sales and restructuring benefits should provide significant help through 2006, headwinds from currency and pension keep us from raising our estimates," it said.

Fellow Dow component Merck & Co.
MRK, +0.10%
was down 2.5% at $28.95 in Instinet after the New England Journal of Medicine said that a key study it published on the safety of the drugmaker's recalled pain reliever Vioxx was flawed. According to an editorial published on the NEJM's Web site on Thursday, a Vioxx study it published in 2000 failed to mention three cases of heart attacks among patients who took Vioxx.

Drugmaker Eli Lilly and Co.
LLY, -0.28%
said that, after eliminating charges, it expects fourth-quarter and full-year 2005 adjusted earnings per share will be at the top of its guidance range of 73 cents and 79 cents and $2.80 to $2.86, respectively. The stock was up 2.5% at $53.50 in light trading.

Elsewhere, Alltel
AT, +0.00%
said it's spinning off its local telecom division into a new unit that will merge with Valor Communications Group
VCG
in a $9.1 billion deal. Alltel holders will get one share of the remaining wireless division, and 1.05 Valor shares in the tax-free debt. See story.

Overseas, the Nikkei 225 climbed despite a downward revision to Japanese GDP, while European equities were pressured by weakness in technology stocks such as ASML
ASML, -0.42%
and Infineon Technologies
IFX, +0.00%

Oil giant BP
BP, +0.84%
also was pressured in London after the government of Kuwait trimmed its stake by selling 185 million shares.

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